Finance

Question 1

What is finance ?

Answer 1

The funding require to set up and expand a business

Question 2

What are the types of business finance ?

Answer 2

Internal and external sources, short, medium and long term sources

Question 3

What are internal sources of finance ?

Answer 3

Finance that is found from within the business

Question 4

What are external sources of finance ?

Answer 4

Finance that is found from outside the business

Question 5

What are the types of short term, internal sources of finance ?

Answer 5

Retained profit and selling assets

Question 6

What is the purpose of short term, internal sources of finance ?

Answer 6

To help solve cash-flow problems or to fund store refurbishments

Question 7

What are the types of medium term, internal sources of finance ?

Answer 7

Retained profits, debentures or share issues

Question 8

What is the purpose of medium term, internal sources of finance ?

Answer 8

To fund capital expenditure

Question 9

What are the types of long term, internal sources of finance ?

Answer 9

Retained profits

Question 10

What is the purpose of long term, internal sources of finance ?

Answer 10

To fund large capital investments

Question 11

What are the types of short term, external sources of finance ?

Answer 11

Overdrafts, venture capital, leasing, grants, and trade credit

Question 12

What is the purpose of short term, external sources of finance ?

Answer 12

To fund cash-flow problems, new equipment or raw materials

Question 13

What are the types of medium term, external sources of finance ?

Answer 13

Bank loans, venture capital, crowd funding, leasing, and grants

Question 14

What is the purpose of medium term, external sources of finance ?

Answer 14

To fund new machinery, research & development and launches of new products

Question 15

What are the types of long term, external sources of finance ?

Answer 15

Bank loans, debentures, peer to peer funding, crowd funding, leasing, grants and share capital

Question 16

What is the purpose of long term, external sources of finance ?

Answer 16

To fund takeovers, expansion plans and large capital investments

Question 17

What is owner’s capital ?

Answer 17

The money or other capital that the person setting up the business may have saved or found

Question 18

What is retained profit ?

Answer 18

The profits kept in the business rather than paid out to its owners

Question 19

What is sales of assets ?

Answer 19

Items of property owned by a person or business that have value to be sold

Question 20

What is a bank loan ?

Answer 20

An amount of money taken by a business from a bank that is repaid over time

Question 21

What is peer to peer funding ?

Answer 21

Lending money to other businesses

Question 22

What is crowd funding ?

Answer 22

Where the business raises small amounts of money from a large number of people

Question 23

What is share capital ?

Answer 23

When funds are raised by issuing shares in exchange for cash

Question 24

What is venture capital ?

Answer 24

Money invested in a business where there is a significant element of risk

Question 25

What is an overdraft ?

Answer 25

When a bank allows a firm to take out more money than it has in its account

Question 26

What is leasing ?

Answer 26

A financial facility that allows a business to use an asset over time in return for regular payments

Question 27

What is trade credit ?

Answer 27

Where suppliers deliver goods now and the business pays the money back at a later date

Question 28

What is debt factoring ?

Answer 28

Where the business sells customer accounts which have outstanding credit to another business to raise cash

Question 29

What is a grant ?

Answer 29

Given by charities or the government to help a business get started